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Kotak Mutual Fund Launches Balanced Advantage Fund

Mumbai: Kotak Mutual Fund today announced the launch of Kotak Balanced Advantage Fund, an open-ended dynamic asset allocation fund  with objective to generate capital appreciation from a dynamically balanced portfolio of equity and equity related securities, debt, and money market securities. It will follow a multi-cap approach for equity allocation; dynamic bond approach for debt allocation.

The New Fund Offer (NFO) opens on July 13, 2018 and closes on July 27, 2018. The face value of the unit is Rs. 10 and the NFO application requires a minimum application amount of Rs. 5,000. The scheme will re-open for continuous sale and repurchase from August 10, 2018.

Harsha Upadhyaya, Chief Investment Officer (Equity), Kotak Mutual Fund said, “The fund is designed with an objective to generate capital appreciation by factoring in volatility and thereby dynamically adjusting allocation between asset classes based on valuations and market trend. This is suitable for all investors – whether first time or sophisticated, to help them participate in wealth creation and compounding potential of equity over long term.”

The fund follows a broad allocation on an investment model based on trailing Nifty P/E and trend/sentiment data. The investment model keeps net equity exposure low when the market valuations are high and vice versa.

“Historical back-tested calculations of the model of five year daily rolling returns since September 2004 showed that the investment doubled in 5 to 8 years’ time span giving better compounding in comparison to traditional investments. The fund aims to invest 65%-100% in Indian equities and equity related securities. The net equity exposure can be brought down significantly below 65% by hedging through equity derivatives” added Upadhyaya.

Investors are aware of the potential of long term growth in equity investments but are generally afraid of the high volatility in the interim period. Dynamically managing asset allocation between equity & debt at different points in time mitigates some of this volatility. However, it is very difficult for the retail or even sophisticated investors to do it manually on a regular basis. Kotak Balanced Advantage Fund manages this asset allocation between equity & debt automatically during market ups & downs giving investors a balanced growth potential.

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